With a market capitalization that once exceeded $129 billion USD, Ripple is the world’s third most popular cryptocurrency. At present, the cryptocurrency has devalued to .43 USD, and now holds the potential to provide the highest long-term returns to investors. Despite the popularity of the cryptocurrency, there are many intricacies within the Ripple space that may come as a surprise to newcomers. With that in mind, we have assembled a list of three things that most people know about Ripple – and you should too.

There are Two Sides to Ripple

At its core, Ripple serves many differences to popular cryptocurrencies like Bitcoin or LiteCoin. Ripple consists of two parallel developments, a transfer network called RippleNet and a cryptocurrency named XRP.

The Ripple Network, as we will uncover in the coming paragraphs, seeks to connect banks and other financial institutions to enable payments and transfers much quicker than the existing SWIFT Network. The SWIFT Network is historically viewed as a cumbersome and relatively inefficient method for making international transfers. The Ripple Network, theoretically the fastest amongst all major cryptocurrencies, seeks to make this process quicker, cheaper, and more hassle free.

Designed to handle no less than 1500 transactions per second, the network far outpaces any alternate means of transferring value over long distances.

It has Trading Functionality

Ripple has several trading functionalities that give it an edge over competing cryptocurrencies. Ripple’s main product is xCurrent, which does not use XRP at the moment. xCurrent has several salient features:

  • Facilitating banks and financial institutions. It is designed to facilitate banks in transacting between one another.
  • A bridge between currencies. It seeks to provide compatibility between all currencies, fiat and cryptocurrencies included. This will help override the current norms, which require foreign exchange conversions and overseas bank transfers for most cross-border trades.
  • Fast and cheap cross-border trades. Building on the last two points, transactions through Ripple are significantly faster and cheaper than prevalent methods. Say an importer in Mexico needs to make a payment for goods bought from an exporter in the USA; at present, this requires the transfer of funds to a bank in the USA or the availability of dollars in a bank account at home. This entails expensive (high fee) money transfers. With Ripple, this process is circumvented through the use of a common transfer protocol and currency.

xTrade, another product of the Ripple network, enables the use of XRP within the Ripple Network; making the network more efficient and user-friendly.

It’s Not Being Used by Banks as Yet

Despite its popularity, Ripple has still not been adopted by any major banks to date. There are several issues highlighted by critics that are actively slowing Ripple’s rapid adoption:

  • Banks are by nature conservative institutions. Any far-ranging changes will usually be subject to organizational inertia and bureaucratic internalization before it is formally adopted.
  • Any major changes are likely to offset/disturb the procedures and databases established over decades. Adopting the Ripple Network, therefore, will require a significant parallel effort over several fronts.
  • Lessening transaction times is not a top priority of banks; what is more critical for them is the cost-effectiveness of any disruptive technology as well as its compatibility with other systems employed by banks for their smooth functioning. Until the Ripple Network shows cross-functionality and is employed by a majority of banks across the world, it is unlikely to see formal introduction within the banking sector.
  • Banks are unlikely to adopt XRP until they are sure that it is a stable currency whose value does not fluctuate too much; despite the market correction in early 2018, XRP prices are still considered to be inflated.

Ripple is unique amongst all major cryptocurrencies due to its dedicated purpose and goal. Its success, therefore, is largely dependent on how fast it is able to utilize its core competencies by replacing the existing SWIFT protocol.

Further reading:

https://www.androidauthority.com/what-is-ripple-819806/

https://www.fool.com/investing/2018/04/27/7-facts-you-didnt-know-about-ripple.aspx

https://ripple.com/insights/10-things-need-know-xrp/